Supporting the preparation of Tanzania's second Five-Year Development Plan (FYDP II)

The Government of Tanzania launched its second Five-Year Development Plan (FYDP II) in June 2016, focusing on the theme 'Nurturing Industrialisation for Economic Transformation and Human Development'. This study informed the preparation of FYDP II. It takes stock of Tanzania’s industrialisation and economic transformation record, policies and strategies, identifies activities for nurturing a semi-industrialised economy, introduces a range of measurable targets that could be considered for the next FYDP, presents a resource mobilisation framework and considers new ways to make industrialisation and economic transformation a reality.

The summary paper argues that Tanzania needs a radically different approach in the coming five years in order to seize the opportunities for industrialisation in a rapidly evolving environment and concludes that there are some early signs of structural transformation in Tanzania. The country needs to build on these by addressing generally agreed policy options, but in a different way compared to the past. It can best do this in practical terms by considering a number of collaborative projects that would illustrate how it can nudge the economy further onto a more transformational path in the following areas: infrastructure development, human capital development, tax policy reform, investment climate reform and practical industrial policy. But this requires learning and adaptive development throughout the duration of the plan – a new approach that is appropriate given the new challenges.